Econ 201 Quiz 5 - Assignment Essays

question

market structure

answer

how many sellers there are in a specific market, how easy or difficult it is for a new firm to enter, and the type of products that are sold.

question

perfect competition- when the following occurs

answer

1) many firms produce identical products; 2) many buyers are available to buy the product and sellers are available to sell the product; 3) sellers/buyers have all relevant info to make rational decisions about the product being bought/sold; 4) firms can enter and leave the market without any restrictions.

question

price taker

answer

also known as perfectly competitive firm; the pressure of competing firms forces them to accept the prevailing equilibrium price in the market.

question

An industry is said to be perfectly competitive when:

answer

each firm has virtually no influence over the price of its product.

question

firms in competitive industries:

answer

will only charge a price equal to the market price; cannot charge anymore than the market price; and will earn less profit if they charge less than the market price.

question

If a single supplier produces a good with many good substitutes, then:

answer

it will have little control over the market price.

question

A market is considered perfectly competitive if:

answer

there are many sellers, each small relative to the total market; the product sold is similar across sellers

question

firm

answer

combines inputs of labor, capital, land, and raw or finished component materials to produce outputs

question

total revenue

answer

income brought into the firm from selling its product.

question

accounting profit

answer

total revenue minus total explicit cost

question

economic profit

answer

total revenue minus total cost, including both explicit and implicit costs

question

fixed costs

answer

expenditures that do not change regardless of the level of production, at least not in the short term

question

variable costs

answer

incurred in the act of producing— the more you produce, the greater the variable cost

question

average total cost

answer

total cost divided by the quantity of output

question

average variable cost

answer

variable cost divided by the quantity of output

question

marginal cost

answer

the additional cost of producing one more unit of output

question

profit margin

answer

if market price is above average cost, average profit, and thus total profit, will be positive; if price is below average cost, then profits will be negative

question

average profit

answer

profit divided by the quantity of output produced; profit margin

question

constant returns to scale

answer

expanding all inputs proportionately does not change the average cost of production

question

diseconomies of scale

answer

the long-run average cost of producing each individual unit increases as total output increases

question

explicit costs

answer

out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

question

implicit costs

answer

opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

question

long-run average cost curve

answer

shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed

question

private enterprise

answer

the ownership of businesses by private individuals

question

production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs

question

production technologies

answer

alternative methods of combining inputs to produce output

question

revenue

answer

income from selling a firm's product; defined as price times quantity sold

question

short-run average cost (SRAC) curve

answer

the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs

question

total cost

answer

the sum of fixed and variable costs of production

question

A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. What was the firm's accounting profit?

answer

Accounting profit = total revenues minus explicit costs = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.

question

the firms factory sits on land owned by the firm that could be rented out for $30,000 per year. What was the firm's economic profit last year?

answer

Economic profit = accounting profit minus implicit cost = $50,000 - $30,000 = $20,000

question

interest payments

answer

explicit cost

question

a forgone opportunity to do something bc else with your resources

answer

implicit cost

question

a cost you consciously pay

answer

explicit cost

question

which costs are measured on per-unit basis

answer

average costs; average variable costs; and marginal costs

question

If Homer operates a small bakery and sells donuts for $4/dozen, he should:

answer

sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4.

question

The marginal revenue for a firm is a constant $45, and the firms marginal cost is given by MC = 1.5Q. What is the firms profit-maximizing level of output?

answer

question

Profit is defined as

answer

total revenue minus total cost

question

to maximize profit, firms should keep producing as long as marginal revenue is:

answer

greater than marginal cost

question

entry

answer

when new firms enter the industry in response to increased industry profits

question

Average cost equals total cost ______ quantity.

answer

divided by

question

Firms are profitable when price is:

answer

greater than average cost

question

in a constant cost industry, P = AC =$20. which sequence of events follows an increase in demand?

answer

P > AC, firms make and economic profit, existing firms expand output, new firms enter the industry, the short-run supply curve shifts right, price falls until profit returns to $0

question

true or false? the more and better substitutes a good has, the more elastic the demand for that good will be

answer

true

question

true or false? the short run is the period before exit or entry can occur

answer

true

question

true or false? the long run is the period after all exit and entry has occurred

answer

true

question

true or false? firms have less pricing power if their firm-level product is more unique.

answer

false

question

true or false? firms in competitive industries should adhere to: 1) expanding output if MR > MC, and 2) reducing output if MC > MR

answer

true

question

marginal revenue is always equal to the price of the product for a competitive firm

answer

true

question

barriers to entry

answer

the legal, technological, or market forces that discourage or prevent potential competitors from entering a market

question

natural monopoly

answer

the barriers to entry are something other than legal prohibition

question

legal monopoly

answer

laws prohibit or limit competition

question

patent

answer

gives an inventor the exclusive right to make, use, or sell an invention for 20 years

question

trademark

answer

an identifying symbol or name for a particular good like the Nike "swoosh" that appears on shoes and athletic gear

question

answer

a form of protection provided by the laws of the US for original works of authorship. no one can reproduce, display, or perform a copyrighted work without permission of the author. usually lasts for the life of the author plus an additional 70 years

question

trade secret

answer

A formula, device, idea, process, or other information used in a business that gives the owner a competitive advantage in the marketplace.

question

intellectual property

answer

the combination of patents, trademarks, copyrights, and trade secret law

question

Deregulation

answer

reduced government restrictions on the firms that could enter, the prices that could be charged, and the quantities that could be produced in many industries, including telecommunications, airlines, trucking, banking, and electricity

question

for which of the following is NOT a reason that monopolies arise?

answer

excess competition

question

a monopoly is a firm without market power

answer

false

question

market power may result from government regulations or patent protection

answer

true

question

market power is the ability to raise prices and sell more units of a good

answer

false

question

which of the following statements about monopoly power is correct?

answer

monopoly power is the power to raise prices above average cost without facing new entry of firms.

question

monopolies will have more market power when one firm owns an input that is difficult to duplicate and the:

answer

Demand for the product is inelastic.

question

Saudi Arabia has market power in the worlds oil markets because:

answer

it controls a significant fraction of the world's oil supply.

question

allocative efficiency

answer

refers to producing the optimal quantity of some output, the quantity where the marginal benefit to society of one more unit just equal the marginal cost

question

suppose that the government decided to reduce pharmaceutical patent protection by requiring companies to sell their drugs at marginal cost. what are the likely consequences of such a policy?

answer

There would be an increase in consumer surplus, the deadweight loss in the market would decline, and the future supply of new drugs would decrease

question

if a pharmaceutical company discovering a new drip is not granted a patent to retain its monopoly power on the drug:

answer

research and development in discovering new drugs will decrease

question

modern theories of economic growth emphasize that monopolies:

answer

may sometimes be necessary for economic growth

question

price discrimination

answer

the business practice of selling the same good at different prices to different customers

question

Arbitrage

answer

process where traders, acting as either buyers or sellers, can exploit price differences for identical products— buying where they price is lower and selling where it is higher

question

Consumers are ____ with price discrimination than with single pricing.

answer

sometimes better off

question

price discrimination is considered bad when:

answer

Total surplus decreases

question

total surplus increases with practice of price discrimination only if:

answer

output increases

question

tying sales

answer

when a customer is required to buy one product only if the customer also buys a second product

question

Bundling

answer

where two or more products are sold as one

question

tying

answer

a form of price discrimination in which one good, called the base good, is tied to a second good called the variable good

question

the difference between tying and bundling in pricing strategies is that:

answer

tying does not require the purchase of both goods, but bundling does.

question

a group of sport channels sold together on a TV or streaming service

answer

bundling

question

restrictions that prohibit patrons from bringing their own wine to restaurants

answer

tyin

question

doesn't require the purchase of both goods

answer

tying

question

requires the purchase of both goods

answer

bundling

question

the Gillette Fusion razor sells for approximately $10.00, and four-set of replacement blades sells for over $8. Which of the following statements is TRUE?

answer

consumers with a high willingness to pay for being clean-shaven will buy many replacement blades; consumers with low willingness to pay for clean-shaven will rarely buy replacement blades; and Gillette's high price replacement blades is a method to extract consumer surplus from those consumers with a high desire to be clean-shaven

question

Bundling can increase efficiency especially when:

answer

...

1 of 84

question

market structure

answer

how many sellers there are in a specific market, how easy or difficult it is for a new firm to enter, and the type of products that are sold.

question

perfect competition- when the following occurs

answer

question

price taker

answer

also known as perfectly competitive firm; the pressure of competing firms forces them to accept the prevailing equilibrium price in the market.

question

An industry is said to be perfectly competitive when:

answer

each firm has virtually no influence over the price of its product.

question

firms in competitive industries:

answer

will only charge a price equal to the market price; cannot charge anymore than the market price; and will earn less profit if they charge less than the market price.

question

If a single supplier produces a good with many good substitutes, then:

answer

it will have little control over the market price.

question

A market is considered perfectly competitive if:

answer

there are many sellers, each small relative to the total market; the product sold is similar across sellers

question

firm

answer

combines inputs of labor, capital, land, and raw or finished component materials to produce outputs

question

total revenue

answer

income brought into the firm from selling its product.

question

accounting profit

answer

total revenue minus total explicit cost

question

economic profit

answer

total revenue minus total cost, including both explicit and implicit costs

question

fixed costs

answer

expenditures that do not change regardless of the level of production, at least not in the short term

question

variable costs

answer

incurred in the act of producing— the more you produce, the greater the variable cost

question

average total cost

answer

total cost divided by the quantity of output

question

average variable cost

answer

variable cost divided by the quantity of output

question

marginal cost

answer

the additional cost of producing one more unit of output

question

profit margin

answer

if market price is above average cost, average profit, and thus total profit, will be positive; if price is below average cost, then profits will be negative

question

average profit

answer

profit divided by the quantity of output produced; profit margin

question

constant returns to scale

answer

expanding all inputs proportionately does not change the average cost of production

question

diseconomies of scale

answer

the long-run average cost of producing each individual unit increases as total output increases

question

explicit costs

answer

out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

question

implicit costs

answer

opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

question

long-run average cost curve

answer

shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed

question

private enterprise

answer

the ownership of businesses by private individuals

question

production

answer

the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs

question

production technologies

answer

alternative methods of combining inputs to produce output

question

revenue

answer

income from selling a firm's product; defined as price times quantity sold

question

short-run average cost (SRAC) curve

answer

the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs

question

total cost

answer

the sum of fixed and variable costs of production

question

A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. What was the firm's accounting profit?

answer

Accounting profit = total revenues minus explicit costs = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.

question

the firms factory sits on land owned by the firm that could be rented out for $30,000 per year. What was the firm's economic profit last year?

answer

Economic profit = accounting profit minus implicit cost = $50,000 - $30,000 = $20,000

question

interest payments

answer

explicit cost

question

a forgone opportunity to do something bc else with your resources

answer

implicit cost

question

a cost you consciously pay

answer

explicit cost

question

which costs are measured on per-unit basis

answer

average costs; average variable costs; and marginal costs

question

If Homer operates a small bakery and sells donuts for $4/dozen, he should:

answer

sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4.

question

The marginal revenue for a firm is a constant $45, and the firms marginal cost is given by MC = 1.5Q. What is the firms profit-maximizing level of output?

answer

question

Profit is defined as

answer

total revenue minus total cost

question

to maximize profit, firms should keep producing as long as marginal revenue is:

answer

greater than marginal cost

question

entry

answer

when new firms enter the industry in response to increased industry profits

question

Average cost equals total cost ______ quantity.

answer

divided by

question

Firms are profitable when price is:

answer

greater than average cost

question

in a constant cost industry, P = AC =$20. which sequence of events follows an increase in demand?

answer

P > AC, firms make and economic profit, existing firms expand output, new firms enter the industry, the short-run supply curve shifts right, price falls until profit returns to $0

question

true or false? the more and better substitutes a good has, the more elastic the demand for that good will be

answer

true

question

true or false? the short run is the period before exit or entry can occur

answer

true

question

true or false? the long run is the period after all exit and entry has occurred

answer

true

question

true or false? firms have less pricing power if their firm-level product is more unique.

answer

false

question

true or false? firms in competitive industries should adhere to: 1) expanding output if MR > MC, and 2) reducing output if MC > MR

answer

true

question

marginal revenue is always equal to the price of the product for a competitive firm

answer

true

question

barriers to entry

answer

the legal, technological, or market forces that discourage or prevent potential competitors from entering a market

question

natural monopoly

answer

the barriers to entry are something other than legal prohibition

question

legal monopoly

answer

laws prohibit or limit competition

question

patent

answer

gives an inventor the exclusive right to make, use, or sell an invention for 20 years

question

trademark

answer

an identifying symbol or name for a particular good like the Nike "swoosh" that appears on shoes and athletic gear

question

answer

question

trade secret

answer

A formula, device, idea, process, or other information used in a business that gives the owner a competitive advantage in the marketplace.

question

intellectual property

answer

the combination of patents, trademarks, copyrights, and trade secret law

question

Deregulation

answer

question

for which of the following is NOT a reason that monopolies arise?

answer

excess competition

question

a monopoly is a firm without market power

answer

false

question

market power may result from government regulations or patent protection

answer

true

question

market power is the ability to raise prices and sell more units of a good

answer

false

question

which of the following statements about monopoly power is correct?

answer

monopoly power is the power to raise prices above average cost without facing new entry of firms.

question

monopolies will have more market power when one firm owns an input that is difficult to duplicate and the:

answer

Demand for the product is inelastic.

question

Saudi Arabia has market power in the worlds oil markets because:

answer

it controls a significant fraction of the world's oil supply.

question

allocative efficiency

answer

refers to producing the optimal quantity of some output, the quantity where the marginal benefit to society of one more unit just equal the marginal cost

question

suppose that the government decided to reduce pharmaceutical patent protection by requiring companies to sell their drugs at marginal cost. what are the likely consequences of such a policy?

answer

There would be an increase in consumer surplus, the deadweight loss in the market would decline, and the future supply of new drugs would decrease

question

if a pharmaceutical company discovering a new drip is not granted a patent to retain its monopoly power on the drug:

answer

research and development in discovering new drugs will decrease

question

modern theories of economic growth emphasize that monopolies:

answer

may sometimes be necessary for economic growth

question

price discrimination

answer

the business practice of selling the same good at different prices to different customers

question

Arbitrage

answer

process where traders, acting as either buyers or sellers, can exploit price differences for identical products— buying where they price is lower and selling where it is higher

question

Consumers are ____ with price discrimination than with single pricing.

answer

sometimes better off

question

price discrimination is considered bad when:

answer

Total surplus decreases

question

total surplus increases with practice of price discrimination only if:

answer

output increases

question

tying sales

answer

when a customer is required to buy one product only if the customer also buys a second product

question

Bundling

answer

where two or more products are sold as one

question

tying

answer

a form of price discrimination in which one good, called the base good, is tied to a second good called the variable good

question

the difference between tying and bundling in pricing strategies is that:

answer

tying does not require the purchase of both goods, but bundling does.

question

a group of sport channels sold together on a TV or streaming service

answer

bundling

question

restrictions that prohibit patrons from bringing their own wine to restaurants

answer

tyin

question

doesn't require the purchase of both goods

answer

tying

question

requires the purchase of both goods

answer

bundling

question

the Gillette Fusion razor sells for approximately $10.00, and four-set of replacement blades sells for over $8. Which of the following statements is TRUE?

answer

question

Bundling can increase efficiency especially when:

answer

...

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order